Correlation Between Siriuspoint and NSTAR

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Can any of the company-specific risk be diversified away by investing in both Siriuspoint and NSTAR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Siriuspoint and NSTAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siriuspoint and NSTAR ELEC 44, you can compare the effects of market volatilities on Siriuspoint and NSTAR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Siriuspoint with a short position of NSTAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siriuspoint and NSTAR.

Diversification Opportunities for Siriuspoint and NSTAR

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Siriuspoint and NSTAR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Siriuspoint and NSTAR ELEC 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR ELEC 44 and Siriuspoint is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Siriuspoint are associated (or correlated) with NSTAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR ELEC 44 has no effect on the direction of Siriuspoint i.e., Siriuspoint and NSTAR go up and down completely randomly.

Pair Corralation between Siriuspoint and NSTAR

Given the investment horizon of 90 days Siriuspoint is expected to generate 1.07 times less return on investment than NSTAR. In addition to that, Siriuspoint is 1.21 times more volatile than NSTAR ELEC 44. It trades about 0.36 of its total potential returns per unit of risk. NSTAR ELEC 44 is currently generating about 0.47 per unit of volatility. If you would invest  8,665  in NSTAR ELEC 44 on September 12, 2024 and sell it today you would earn a total of  230.00  from holding NSTAR ELEC 44 or generate 2.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy27.27%
ValuesDaily Returns

Siriuspoint  vs.  NSTAR ELEC 44

 Performance 
       Timeline  
Siriuspoint 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint unveiled solid returns over the last few months and may actually be approaching a breakup point.
NSTAR ELEC 44 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NSTAR ELEC 44 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NSTAR ELEC 44 investors.

Siriuspoint and NSTAR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Siriuspoint and NSTAR

The main advantage of trading using opposite Siriuspoint and NSTAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siriuspoint position performs unexpectedly, NSTAR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NSTAR will offset losses from the drop in NSTAR's long position.
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The idea behind Siriuspoint and NSTAR ELEC 44 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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